debt

What to do when a settled debt resurfaces

Steve BucciDear Debt Adviser,
A few years ago, I worked with a hospital to settle an old debt from a visit to its emergency room. The debt has now resurfaced -- this time with a collection agency. I'm fighting to get it removed from my credit report. Unfortunately, I no longer have the settlement paperwork from the hospital. What can I do at this point? What can I do to prevent this from happening again?
-- Andrea

Dear Andrea,
Anyone who says neatness doesn't count has never tried to find proof of an old payment. Not having anything in writing is going to be a problem, but it may not be insurmountable.

I suggest that you start with the hospital. Chances are that the hospital still keeps records of your bill and the bill's settlement. It could be that your bill was inadvertently sent to collections when it should not have been. If that is the case, the hospital can get things cleared up for you in short order.

Start with the hospital's billing department. If you can recall the staffer who helped you before, ask for that person. If not, it may help to remark how helpful he or she was and explain that you received financial assistance that resolved the bill, and that you're eternally grateful. Remember, you are dealing with people, not a hospital. Being nice helps!

If the hospital cannot find your records, ask if you can again apply for financial assistance to satisfy the debt. If they agree, politely request that they contact the collection agency about your account so that the collection activity stops. Once the collection account has been taken back from the agency by the hospital, the collector will have nothing to report and the account should drop from your credit report. Give it 30 to 60 days and check all three credit bureau reports. If it is still being reported, disputing the item with the bureau should eliminate it.

If the hospital is unwilling or unable to work with you, you still have a few options.

  • Ask the collector to validate the debt. If they don't have the proper information to validate the debt, dispute the debt with the credit bureau and have it removed.
  • Check your state's statute of limitations law. If your old debt falls outside the timelines, tell the collector that the bill was resolved and that you do not owe anything, will not pay anything, and do not want to be contacted again. They may report a valid debt, but they won't be able to collect anything.
  • Work out a repayment plan or lump-sum settlement with the collector. Calculate the true cost of that debt at Bankrate.com. If the debt is too much to handle, talk to an attorney about filing for bankruptcy to have the debt absolved or paid off through a Chapter 13.

However you resolve the debt, be sure to keep copies of all agreements and get everything in writing before you send anyone any money. If you don't have one already, designate a drawer, file cabinet, fire box, etc. for important papers that need to be kept indefinitely. I keep my own credit card receipts for a year and statements for seven.

Good luck!

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